FERC Chairman Pat Wood said last Thursday that he believes the natural gas industry should seriously consider the use of independent data hubs for the collection and distribution of information on gas trades.
"The industry needs to gravitate toward this independent data hub concept," Wood said during his farewell speech to the Natural Gas Roundtable in Washington, DC. "I think that the independent hub, a neutral, user-funded aggregator of arms-length sales information, is an idea whose time has come." Industry should choose the "most trustworthy [hub], at the lowest cost."
Wood, who will leave FERC on June 30, questioned whether the "daily and formal polling" of natural gas trades by industry publications was "really good enough to inspire real confidence in the price formation of this commodity," whose price has tripled in the past five years.
Although the "public airing" of problems associated with the published price indexes has led to "more effective practices" by price reporters and publishers, "I think it's time to take it to the next level," he told industry representatives, executives and former regulators. Gas is no longer the "90 cents commodity."
He said he also believes that gas quality and interchangeability standards must remain a priority. "With some technical issues out of the way, we now need to focus on whether we need national standards for gas quality."
Wood noted that liquefied natural gas (LNG) "was not even on my mind four years ago when I came to this job," and now it "has become the primary gas infrastructure issue on FERC's agenda."
It's estimated that 7-9 new vaporization terminals and 3-4 expansions of existing terminals will be needed in this decade, along with the Mackenzie Delta pipeline project and Alaska pipeline, to meet future natural gas demand, he said. FERC so far has approved four LNG terminals, with a total of 54 Bcf/d of new capacity, and a number of other projects are in "advanced stages" of planning and permitting, Wood noted.
Even more natural gas storage infrastructure will be required to accommodate LNG imports and Canadian and Arctic gas, he said. Wood estimated that FERC has certificated 129 Bcf of new storage capacity during his term in office, as well as more than 4,000 miles of new natural gas pipelines.
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